DAY 22- Philippine Government,

Taxation, and Agrarian Reform (Part 2)

LEARNING OBJECTIVE: At the end of the class, the students
should be able to:
1. I can recognize the social and political issues in the Philippines using
the lens of history.
 What is taxation?
• A means by which governments finance their
expenditure by imposing charges on citizens and
corporate entities.
What is the difference between
national taxes and local
government taxation?
 National taxes
• National taxes are money that we
give to the government through
the Bureau of Internal Revenue it
is based on the National Internal
Revenue Code of 1997 or the
Republic Act No. 8424 otherwise
known as the Tax Reform Act of
1997
Local Government Taxation
• On the other hand, the local
government taxation in the
Philippines are based on Republic
Act 7160 or otherwise known as the
Local Government Code of 1991.
• These taxes, fees or charges are
imposed by the local government
units such as provinces, cities,
municipalities, and barangays, who
have been given the power to levy
such taxes by the same code.
NATIONAL TAXES IN THE PHILIPPINES

• 1. Capital Gains Tax 7. Expanded Withholding Tax

• 2. Documentary Stamp Tax 8. Income Tax
• 3. Donor’s Tax 9. Percentage Tax
• 4. Estate Tax 10. Value Added Tax
• 5. Excise Tax 11.Final Withholding Tax
• 6. Withholding Tax on 12. Withholding Tax on
Compensation Government Money Payments
NATIONAL TAXES IN
THE PHILIPPINES
 Capital Gains Tax

• It is a tax imposed on the gains presumed to have

been realized by the seller from the sale, exchange, or
other disposition of capital assets located in the
Philippines, including pacto de retro sales and other
forms of conditional sale.
 Documentary Stamp Tax
• It is a tax on documents, instruments, loan
agreements and papers evidencing the acceptance,
assignment, sale or transfer of an obligation, rights, or
property incident thereto. Examples of documentary
stamp tax are those that are charged on bank
promissory notes, deed of sale, and deed of
assignment on transfer of shares of corporate stock
ownership.
 Donor’s Tax

• It is a tax on a donation or gift, and is imposed on the

gratuitous transfer of property between two or more
persons who are living at the time of the transfer.
Donor’s tax is based on a graduated schedule of tax
rate.
• 
 Estate Tax
• Estate Tax – is a tax on the right of the deceased
person to transmit his/her estate to his/her lawful
heirs and beneficiaries at the time of death and on
certain transfers which are made by law as equivalent
to testamentary disposition. Estate tax is also based
on a graduated schedule of tax rate.
 
 Income Tax
is a tax on all yearly profits arising from property, profession,
trades or offices or as a tax on a person’s income,
emoluments, profits and the like. Self-employed individuals
and corporate taxpayers pay quarterly income taxes from 1st
quarter to 3rd quarter.
And instead of filing quarterly income tax on the fourth quarter,
they file and pay their annual income tax return for the taxable
year. Individual income tax is based on graduated schedule of
tax rate, while corporate income tax in based on a fixed rate
prescribe by the tax law or special law.
 Percentage Tax
is a business tax imposed on persons or entities who
sell or lease goods, properties or services in the course
of trade or business whose gross annual sales or
receipts do not exceed the amount required to register
as VAT-registered taxpayers. Percentage taxes are
usually based on a fixed rate.
They are usually paid monthly by businesses or
professionals. However, some special industries and
transactions pay percentage tax on a quarterly basis.
 Value Added Tax
Value Added Tax – is a business tax imposed and
collected from the seller in the course of trade or
business on every sale of properties (real or personal)
lease of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus, it can be
passed on to the buyer, causing this to increase the
prices of most goods and services bought and paid by
consumers. VAT returns are usually filed and paid
monthly and quarterly.
 Excise Tax
Excise Tax – is a tax imposed on goods
manufactured or produced in the Philippines for
domestic sale or consumption or any other
disposition. It is also imposed on things that are
imported.
Withholding Tax on Compensation
Withholding Tax on Compensation – is the tax
withheld from individuals receiving purely
compensation income. This tax is what employers
withheld in their employees’ compensation
income and remit to the government through the
BIR or authorized accrediting agent.
Expanded Withholding Tax
Expanded Withholding Tax – is a kind of
withholding tax which is prescribed only for
certain payors and is creditable against the
income tax due of the payee for the taxable
quarter year. Examples of the expanded
withholding taxes are those that are withheld on
rental income and professional income.
 
 Final Withholding Tax
Final Withholding Tax – is a kind of withholding tax
which is prescribed only for certain payors and is not
creditable against the income tax due of the payee for
the taxable year. Income Tax withheld constitutes the
full and final payment of the Income Tax due from the
payee on the said income. An example of final
withholding tax is the tax withheld by banks on the
interest income earned on bank deposits.
Withholding Tax on Government Money
Payments
Withholding Tax on Government Money
Payments – is the withholding tax withheld by
government offices and instrumentalities,
including government-owned or -controlled
corporations and local government units, before
making any payments to private individuals,
corporations, partnerships and/or associations
 DIFFERENT LOCAL TAXES IN THE
PHILIPPINES
1. Tax on Transfer of Real Property • 9. Amusement Tax
Ownership • 10. Annual Fixed Tax For Every
2. Tax on Business of Printing and Delivery Truck or Van of
Publication Manufacturers or Producers,
3. Franchise Tax Wholesalers of, Dealers, or
4. Tax on Sand, Gravel and Other Retailers in, Certain Products
Quarry Resources • 11. Tax on Business
5. Professional Tax • 12.Fees for Sealing and Licensing
6. Community Tax of Weights and Measures
7. Fishery Rentals, Fees and Charges • 13. Service Fees or Charges
8. Community Tax • 14. Barangay Clearance
LOCAL TAXES IN
THE PHILIPPINES
 Tax on Transfer of Real Property
Ownership
Tax on Transfer of Real Property Ownership –
tax imposed on the sale, donation, barter, or on
any other mode of transferring ownership or title
of real property.
 Tax on Business of Printing and
Publication
Tax on Business of Printing and Publication –
tax on the business of persons engaged in the
printing and/or publication of books, cards,
posters, leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature.
 Franchise Tax
Franchise Tax – tax on businesses enjoying a
franchise, at the rate not exceeding fifty percent
(50%) of one percent (1%) of the gross annual
receipts for the preceding calendar year based on
the incoming receipt, or realized, within its
territorial jurisdiction.
Tax on Sand, Gravel and Other Quarry Resources
Tax on Sand, Gravel and Other Quarry
Resources – tax imposed on ordinary stones,
sand, gravel, earth, and other quarry resources,
as defined under the National Internal Revenue
Code, as amended, extracted from public lands or
from the beds of seas, lakes, rivers, streams,
creeks, and other public waters within its territorial
jurisdiction.
 Professional Tax
Professional Tax – an annual professional tax on
each person engaged in the exercise or practice
of his profession requiring government
examination.
 Amusement Tax
Amusement Tax – tax collected from the
proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia,
and other places of amusement.
 Annual Fixed Tax For Every Delivery Truck or Van of
Manufacturers or Producers, Wholesalers of, Dealers, or
Retailers in, Certain Products

– an annual fixed tax for every truck, van or any vehicle used
by manufacturers, producers, wholesalers, dealers or retailers
in the delivery or distribution of distilled spirits, fermented
liquors, soft drinks, cigars and cigarettes, and other products
as may be determined by the sangguniang panlalawigan, to
sales outlets, or consumers, whether directly or indirectly,
within the province.
 Tax on Business
Tax on Business – tax imposed by cities,
municipalities on businesses before they will be
issued a business license or permits to start
operations based on the schedule of rates
prescribed by the local government code, as
amended. Take note that the rates may vary
among cities and municipalities. This is usually
what businesses pay to get their Business
Mayor’s Permit.
Fees for Sealing and Licensing of Weights and Measures

fees for the sealing and licensing of weights and

measures at such reasonable rates as shall be
prescribed by the sangguniang bayan of the
municipality or city.
 Fishery Rentals, Fees and Charges
Fishery Rentals, Fees and Charges – rentals,
fees or charges imposed by the municipality/city
to grantees of fishery privileges in the
municipal/city waters, e.g., fishery privileges to
erect fish corrals, oysters, mussels or other
aquatic beds or bangus fry areas and others as
mentioned in the local government code, as
amended
 Community Tax
Community Tax – tax levied by cities or municipalities
to every inhabitant of the Philippines eighteen (18)
years of age or over who has been regularly employed
on a wage or salary basis for at least thirty (30)
consecutive working days during any calendar year, or
who is engaged in business or occupation, or who
owns real property with an aggregate assessed value
of One thousand pesos (P1,000.00) or more, or who is
required by law to file an income tax return.
 Community Tax
Community tax is also imposed on every corporation no
matter how created or organized, whether domestic or
resident foreign, engaged in or doing business in the
Philippines. Taxes that may be levied by the barangays on
stores or retailers with fixed business establishments with
gross sales of receipts of the preceding calendar year of Fifty
thousand pesos (P50,000.00) or less, in the case of cities and
Thirty thousand pesos (P30,000.00) or less, in the case of
municipalities, at a rate not exceeding one percent (1%) on
such gross sales or receipts.
 Service Fees or Charges
Service Fees or Charges – fees or charges that
may be collected by the barangays for services
rendered in connection with the regulations or the
use of barangay-owned properties or service
facilities, such as palay, copra, or tobacco dryers.
 Barangay Clearance
Barangay Clearance – a reasonable fee
collected by barangays upon issuance of
barangay clearance – a document required for
many government transactions, such as when
applying for business permit with the city or
municipality.